Swedish town finds new hope in Saab revival

Saab Automobile is raising fresh hopes in its Swedish hometown as the mothballed brand gears up for another revival, more than a year after it went bankrupt.

Saab's new parent, owned by a Chinese renewable energy investor, intends to start churning out 9-3 sedans and convertibles in August, according to a letter sent to parts suppliers and obtained by Bloomberg News. Sales of the diesel-powered vehicles are intended to help fund Saab's conversion into an electric car manufacturer.

Trollhaettan, where Saab is based, has had a rough time since assembly lines were halted almost two years ago. About 3,400 people -- 7 percent of the city's population -- worked for Saab there before its bankruptcy. The parking lot at the once-bustling factory is all but abandoned.

"Even in the darkest and hardest times, new hopes can be awakened through new possibilities," said Birgitta Simson, a 52-year-old deacon at the Swedish Church in Trollhaettan. "We have to believe that God cares about our city and that in the darkest hours, a possibility can come from the most unexpected direction."

General Motors Co. had trouble finding a buyer for Saab after deciding to sell the company in late 2008. A year later, as equipment at the Trollhaettan plant was being packed, supercar maker Spyker NV swooped in with a last-minute bid, sealing the deal in February 2010. By June 2011, that effort had fizzled as a lack of cash forced Spyker to halt production.

Small chance of success

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The new owners aim to supply China with electric vehicles. After adding the 9-3X wagon later this year and electrics based on the 9-3 in 2014, the goal is to produce 120,000 cars a year by 2016, according to the letter from National Electric Vehicle Sweden AB, or Nevs, which bought Saab out of bankruptcy last August. That target would come close to the brand's 2006 peak of 133,000 autos.

"The likelihood of this project turning into a success is very small," said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at Germany's University of Duisburg-Essen. "Even in China, selling electric cars is a very difficult business."

Although Saab's production goal exceeds the 107,200 electric vehicles assembled worldwide last year, according to market researcher IHS Automotive, that's not curbing the enthusiasm in Trollhaettan.

"The business plan is well thought out and completely realistic," said Paul Aakerlund, one of the town's three mayors, who drives a Saab 9-3 and worked at the manufacturer for more than 30 years. "Imagine if the world's first large-scale electric-car venture starts in little Trollhaettan. It's undoubtedly very tickling and exciting."

More recharging stations

The plan hinges on China, where the government plans to set up 400,000 recharging stations in 20 cities by 2015, according to a five-year development plan for electric autos. China's goal is to increase sales of alternative energy vehicles to 500,000 by 2015, from 12,791 last year, according to the China Association of Automobile Manufacturers.

"China realizes the need to meet the climate challenges through electric vehicles," Mikael Oestlund, a spokesman for Nevs, said by phone.

Nevs earlier this month announced that the Chinese city of Qingdao will invest 2 billion kronor ($307 million) in exchange for a 22 percent stake in Nevs, with further investments to be made through a joint venture in China. Nevs plans to build a second factory in Qingdao once production in Trollhaettan reaches capacity.

Trollhaettan Trolls

Nevs is in turn owned by National Modern Energy Holdings Ltd., a Hong Kong-based company that also controls renewable power-plant builder State Power Group, which last year opened plant in Beijing to make batteries for cars and buses.

Saab and Trollhaettan are inextricably linked. In the 1980s, stickers saying "Made in Trollhaettan by Trolls" became popular among the brand's fans. Replicas are still available on eBay for about $7.

After Saab went bankrupt, unemployment in Trollhaettan soared to 16 percent, the highest level in Sweden and almost double the national average, according to the city. Youth unemployment now stands at 32 percent. The revival plan could create as many as 2,500 jobs in the factory and at suppliers and other companies in the area, Aakerlund said.

Swedish parts makers are supportive, even though they suffered in Saab's bankruptcy. The return of car production to Trollhaettan could boost prospects for the country's auto industry, which is currently reliant on Volvo Car Corp., now owned by China's Zhejiang Geely Holding Group Co., and truckmakers Volvo AB and Scania AB, said Fredrik Sidahl, head of Sweden's parts supplier organization FKG.

"We must have a dynamic in Sweden in terms of material and components, and a second automaker would bring that dynamic back," said Sidahl. "This market is completely dead today."